storyboard lean six sigma kaizen - my purchasing...
TRANSCRIPT
Storyboard Lean Six Sigma – Kaizen
The Purchase Order Processing Success Story
White Belts:
Team listing
4 Members of
Purchasing
Department
Dr. Tom DePaoli Black Belt
www.apollosolutions.us
https://www.amazon.com/author/tomdepaoli
Lean Six Sigma - Project Selection For Kaizen
Problem/Defect:
Excessive Processing Time for
Purchase Orders (40,000)
Many Different methods for
orders
Large # of suppliers
Missed discounts
Measure Analyze Improve Control Define
30 Days
20Days
10 Days 05 Days
0 Days
LSS Tools: Four Block Charter, White Belt Team Training, Assignment of Green Belt, Assignment of Champion, Kaizen date
Objectives:
Reduce Processing Time
To a 10 day target or better
End Bureaucratic chaos
Reduce missed discounts
Rationalize suppliers
? ? ?
? ? ? Why
This
Project?
Project
Selection
Reasons
1. Seven different ways to
procure goods.
2. Excessive manual
handling of transactions
3. Over $1,000,000 in
missed supplier
discounts. 3 way match.
4. Over 5000 suppliers .
5. Cited by auditors on
controls and filing
6. Purchasing downsized
from 8 persons to 4.
7. Processing cycle time all
over the map
Lean Six Sigma - Define Phase Tools
Measure Analyze Improve Control Define
LSS Tools: Project Charter, Kaizen Plan, SIPOC, VOC, Project Scope, AS IS process map
Project
Selection
Project
Charter
4 Block
• Problem Defined
• Key Metrics (Dollars lost)
• Basic Objective Statement
• LSS Kaizen Team Members
Selected and training set up
to become White Belts
Purchasing
LSS
Kaizen
Team July 20-21
The Requirement
Is
Established
The Kaizen Team
Is
Assembled
The
Kaizen tools used
Project
Plan
SIPOC: What does the process look like?
What’s going in?
What’s coming out?
Voice of the
Customer: What are the
customers and stakeholders saying?
AS IS Process Process map:
What is the process and steps?
Project Scope: What the project is
not and what it will cover in
Purchasing.
Lean Six Sigma - Measure Phase Tools
Measure Analyze Improve Control Define
LSS: Purchasing Data Collection Plan, Baseline Performance, VOC Analysis, CTQ Analysis, AS IS Process Mapping,
Project
Selection
Remedy
Transactions
Purchase
Orders
What
Data Do
You Need?
Data
Collection
Plan
More Voice of
the
Customer
Analysis
Needed.
What’s
Important to
the Customer?
What is
the Baseline
Performance?
What Does
The Process
Look Like?
10-30
DAYS
20 DAYS
Cycle Time
AS IS Process
Flow
Diagramed 7 ways to
complete a purchase
order
Supplier
List
Key Messages!
Voice of the Customer
1. Untimely process
2. Lack of controls
3. Missed discounts
4. Too many processes
5. Not getting what I
want on time
6. Confusion and
frustration
Lean Six Sigma - Analyze Phase Tools
Measure Analyze Improve Control Define
LSS Tools: Process Analysis, FMEA, Basic Cause Analysis, 5-Why Analysis
Project
Selection
How is
The Process
Performing?
Redundancy
Rework
Loops Bottleneck
Non-Value
Added Steps Hand-Offs
Where &
When
Does the
Process
Fail?
Failure
Modes &
Effects
Analysis
• Lack of clear requirements
• Highly manual process prone to error
• Multiple crises orders
• Constant expediting
• No time to match orders to invoices
• Too much choice in suppliers
• Supplier performance not tracked
• Unwieldy audit requirements
What
Are the some causes
of the Process
Failures?
Why Do
the
Process
Failures
Occur?
1. Why?
2. Why?
3. Why?
4. Why?
5. Why?
Fundamental
Cause- perhaps high
manual workload that
leads to errors
5-Why
Analysis
to get to
Fundamental Causes
• Delays in getting
requirements
• Lead times
• Process errors
• High manual process
• Multiple suppliers-
performance not tracked
• Too many ways to order
goods and services
20 days cycle
average, 5000
suppliers ,many
missed discounts
Lean Six Sigma - Analyze Phase
Measure Analyze Improve Control Define
LSS Tools: Process Analysis, FMEA, Graphical Analysis, Cause Analysis, 5-Why Analysis, Statistical Analysis
Project
Selection
What is the
Root
of the
Major Failures?
80% of the orders
Are under $1000. 72%
Are under $500.
Small orders are causing the
most errors.
PARETO
CHART OF
DEFECTS
What is the
Current
Baseline
Performance?
D
A
Y
S
10 20 3/0 40 50
Small order performance
All over the map with
Very large standard deviation.
What are the
Hypotheses
for Causes
of Process
Failures?
1. Sheer volume
2. Many suppliers
3. Many Order
methods
4. Supplier
performance not
confronted
5. Communications
and follow-up
nearly
impossible
Next Phase is
To Perform
Statistical
Analysis to Test
Each Hypothesis!
• Forms understanding of
causes
• Helps to develop solutions
• Validates Results
• Establishes Reality!
Small
orders
Delays
Lean Six Sigma - Improve Phase Tools
Measure Analyze Improve Control Define
LSS Tools: Data collection Plan, Pilot Plan, Communication Plan, FMEA
Project
Selection
What is
the Best
Solution?
In the Future.
Data
Collection
Future
Possible
Solution 1
Solution 2
Solution 3 • Test Hypotheses
• Validate delay reasons
• Improve case status
visibility
Data Plan: Initial data on
delays
Execute a Data
Collection Plan
and a Communication
Plan
Data
Plan
Communication
Plan Internal
And external
Proceed
With
Plan
Monitor the
Results
and Adjust
D
A
Y
S
1/05 2/05 3/05 4/05 5/05 6/05 7/05
Lean Six Sigma - Improve Phase Tools
Measure Analyze Improve Control Define
LSS Tools: TO BE process
Project
Selection
New Process TO BE Improvements List
•Analyze small purchase orders-concentrate on simplifying purchases under $1000
•Radically Reduce the number of suppliers
•Establish a few key preferred suppliers and track their performance
•Consider and implement purchase card usage
•Consider e-procurement methods
•Reduce the number of methods to purchase good (currently 7 methods )
•Empower more requisitioners to use the short order form (purchasing not involved)
•Review supplier list and eliminate “onesie twosie” type suppliers and inactive ones
•Develop a small order purchase manual for power requisitioners
•Consider outsourcing type agreements for the storerooms
•Update all purchase order manuals
•Raise short order limit to $2500 versus $1000 for selected power users
Lean Six Sigma - Control Phase Tools
Measure Analyze Improve Control Define
Lean Six Sigma Tools: EEO Process Metrics, Lessons Learned, Documented Procedures, Monitor Plan
Project
Selection
Initiate the
Roll-Out
Plan
Let’s
Roll!
Initiate
Long PO
Metrics
Post Project
Review &
Lessons
Learned
Workload in Big Trouble
Workload Falling Behind
Workload on Track Lessons
Learned
• What Was Done Right?
• What Was Done Wrong?
• What Could Have Gone Better?
• How Can We Improve?
• Provides visual status of the process
• Provides focus for management
• Maintains visibility of critical areas
• Establish trigger points for action
• 160 per week average large POs
•Larger dollar orders
Track Long PO system
Lean Six Sigma - Control Phase Tools
Measure Analyze Improve Control Define
Lean Six Sigma Tools: Process Metrics, Lessons Learned, Control Charts, Documented Procedures, Monitor Plan
Project
Selection
Provide
Visibility
PO
Process Control
Fully
Document
Procedures
And Metrics
Transition to
Continuous
Case Improvement
Monitor &
Response
Plans
D
A
Y
S
1/05 2/05 3/05 4/05 5/05 6/05 7/05
How to
Keep Cycle
Time Down
A
Primer
DID THE NEW PROCESS
IMPROVE CYCLE TIME?
Especially Long POs
Purchasing professionals can spend more quality time on them!
Monitoring
Cycle Time
Long PO
Metrics
Established Control
Methodology and Action
Plan
ON TO THE NEXT
PROJECT!
Results
Measure Analyze Improve Results Define
LSS Tools: TO BE process
Project
Selection
Actual TO BE Improvements List
•Cycle time for small purchase orders now averaged 3 days or less
•Suppliers reduced from over 5000 to 256
•About 30 key preferred suppliers established
•Purchase card implemented and now capture about 80% of purchase orders under $1000
•E-procurement module added to ERP system
•Reduced the number of methods to purchase goods from 7 to 3
•Empowered 20 more requisitioners to use the short order purchasing form (purchasing
not involved)
•Developed a small order online purchase manual for power requisitioners
•Outsourced some storeroom functions to preferred supplier distributers
•Updated all purchase order manuals
•Raised short order limit to $2500 versus $1000 for some selected screened power users
Dr. Tom Information
Measure Analyze Improve Bio Define
LSS Tools: TO BE process
Project
Selection
Short Bio
Dr. Tom DePaoli is the Management Program Director at Marian University in Fond du Lac,
Wisconsin, and the Principal (CEO) of Apollo Solutions (www.apollosolutions.us) which does
general business consulting in the supply chain, Lean Six Sigma and human resources areas.
Recently he retired from the Navy Reserve after over 30 years of service. In other civilian careers,
he was a supply chain and human resources executive with corporate purchasing turnaround
experience and Lean Six Sigma deployments. He is the author of: Kaizen Kreativity
(Oops!), Common Sense Purchasing, Common Sense Supply Management and Growing up
Italian in the 50s. His Amazon author’s page is https://www.amazon.com/author/tomdepaoli